MINUTES SENATE FINANCE COMMITTEE May 11, 1999 5:35 PM TAPES SFC-99 # 133, Side A and Side B CALL TO ORDER Co-Chair Torgerson convened the meeting at approximately 5:35 PM. PRESENT Senator John Torgerson, Senator Loren Leman, Senator Pete Kelly, Senator Randy Phillips, Senator Dave Donley, Senator Lyda Green and Senator Al Adams were present when the meeting convened. Senator Gary Wilken arrived shortly thereafter and Senator Sean Parnell arrived later. Also Attending: SENATOR KIM ELTON; REPRESENTATIVE GENE THERRIAULT; REPRESENTATIVE VIC KOHRING; ANNALEE MCCONNELL, Director, Office of Management and Budget, Office of the Governor; JACK KREINHEDER, Senior Policy Analyst, Office of Management and Budget, Office of the Governor; JUANITA HENSLEY, Administrator, Division of Motor Vehicles, Department of Administration; KAREN REHFELD, Director, Division of Education Support Services, Department of Education; EDDY JEANS, Manager, School Finance Section, Education Support Services, Department of Education; ELMER LINDSTROM, Special Assistant, Office of the Commissioner, Department of Health and Social Services; JANET CLARKE, Director, Division of Administrative Services, Department of Health and Social Services; GINA MACDONALD, Special Projects Coordinator, Division of Mental Health and Developmental Disabilities, Department of Health and Social Services; DWIGHT PERKINS, Deputy Commissioner, Department of Labor; REMOND HENDERSON, Director, Division of Administrative Services, Department of Labor; DAVID FINKLESTEIN, Alaskans for Medical Rights. SUMMARY INFORMATION SB 97-MENTAL HEALTH; RECORDS; TREATMENT The committee heard from the Department of Health and Social Services. A committee substitute was adopted and moved from committee. SB 112-POSTSECONDARY CLASS FOR HIGH SCHOOL The committee heard from the sponsor and the Department of Education. The bill was held in committee. HB 40-DEPT OF COMMERCE & RURAL DEVELOPMENT The committee heard from the sponsor and the Department of Education. A committee substitute was discussed but not adopted and the bill was held in committee. SB 113-FINANCES OF ALASKA HOUSING FINANCE CORP This bill was not heard. SB 94-MEDICAL USE OF MARIJUANA The committee heard from the sponsor, the Department of Health and Social Services and Alaskans for Medical Rights, the sponsor of the ballot initiative. Seven amendments were considered and six were adopted. The bill was reported out of committee as amended. HB 209-ALASKA SCIENCE & TECH FOUNDATION GRANTS This bill was not heard due to teleconference difficulties. CS FOR SENATE BILL NO. 97(HES) "An Act relating to mental health services and programs; relating to liability for payment for mental health evaluation and treatment services; and providing for an effective date." This was the second hearing for this bill in the Senate Finance Committee. GINA MACDONALD, Special Projects Coordinator, Division of Mental Health and Developmental Disabilities, Department of Health and Social Services explained the new version of SB 97, 1-LS0545/K 4/30/99. She told the committee that the committee substitute represented the efforts of the Alaska State Hospital and Nursing Home Association, the Department of Health and Social Services, the Disability Law Center, the Alaska Mental Health Board and the Alaska Mental Health Trust Authority. Those efforts clarified the intent of the bill and set out the practices and procedures involved in establishing eligibility and providing the services. The committee substitute consists primarily of language changes and is a consensus among all involved stakeholders, according to Gina Macdonald. She gave an example of the language clarifications using AS 47.30.910(a), which, in the original version of the bill, stated: ".the patient.shall pay or contribute to the charges for the care, transportation, and treatment of the patient when the patient is hospitalized.." The CS deletes "or contribute" in order to clarify the intent of the parties involved and to simply stipulate that the patient shall pay the charges for care. Co-Chair John Torgerson noted that Senator Lyda Green's earlier questions on the bill had been answered with changes made in this committee substitute. Senator Lyda Green stated that she was now comfortable with the bill. Senator Lyda Green moved to adopt the committee substitute, SB 97 Version "K", as a Workdraft. There was no objection and it was adopted. Senator Pete Kelly offered a motion to report from committee CS SB 97 Version "K" with individual recommendations and accompanying fiscal note. Without objection, it was so ordered. CS FOR SENATE BILL NO. 112(HES) "An Act relating to a program of postsecondary education for high school students." This was the first hearing for this bill in the Senate Finance Committee. Senator KIM ELTON, sponsor, testified that the bill would give high school students and families new academic options at no cost. The bill was termed "The Running Start Education Program". In this program, 11th and 12th grade high school students will get dual credit for courses taken at a publicly funded Alaska college or vocational school. These credits would apply toward both the high school and college (or vocational school) graduation requirements. The tuition fees would be paid by the student's home school district. Senator Kim Elton suggested that this concept is not unusual; twenty other jurisdictions had similar programs and SB 112 is based on a Washington State program. He noted that other states require the families pay the tuition costs rather than the school districts. Senator Kim Elton testified to the benefits of the Running Start Program. The program would expand course options beyond what is available at the participating student's high school. He stressed that this was especially valuable for gifted and talented students. Senator Kim Elton added that the program would also provide opportunities to enroll in technical courses, which is good for those students not on the academic tract. The technical courses could help get those students ready to enter the work world. Senator Kim Elton pointed out the 2.75 grade point average eligibility requirement for the program, and indicated that there is a provision allowing school administrators to waive the stipulation for certain students. The waiver is important to allow some students, who are not planning to pursue a college degree, to obtain vocational training. He also noted that the participants would have to be students "in good standing" at the school district where they are enrolled. Senator Kim Elton explained that the participating students would be responsible for applying and gaining acceptance into a college or vocational school. The student and the student's family would decide which courses to take. He commented that in other states with similar programs, participating students usually took two or three courses. Senator Kim Elton explained that in the program proposed in SB 112, once the student successfully completed the college or vocational technical school course, the student would receive both college and high school credit. The amount of the high school credit awarded to the student would be determined by the high school administration. The student's high school would submit the tuition and lab fees to the college or vocational school. The student would pay for books and supplies and retain ownership. Senator Kim Elton disclosed that students who were enrolled full-time in high school would not be provided tuition reimbursement for college or vocational courses under this bill. Senator Kim Elton noted that the fiscal note was not based on any cost or result from this bill. He remarked that the fiscal note reflects the possibility that some high school students would purposely fail the graduation exit exam in order to remain a high school student and continue earning college credits at the school district's expense. He believed that scenario was only a remote possibility because of the bill's provision that the program is only available to students in good standing and because the school district could make that good standing determination. He surmised that a school district could find that a student who fails the exit exam is not in good standing. He suggested someone from the Department of Education could speak more directly to the fiscal note. Senator Gary Wilken referred to AS 14.30.780(a), page 3 line 6 of the committee substitute that prohibited school districts from paying postsecondary course costs for full- time secondary school students. He wanted to know how the sponsor defined "full-time secondary student" and suggested the Committee incorporate a definition into the language of the bill. Senator Kim Elton answered that a full-time secondary student is a student who attends high school for a "normal school day". He stressed that it was important to let the school district define full-time secondary student, since each school district operated under different circumstances. In answering Senator Gary Wilken's next question, Senator Kim Elton said correspondence students qualify as full-time students if the correspondence program is provided by a school district within the state. Co-Chair John Torgerson asked if the educational funding allocation for a participating student would be granted to the college or vocational school where the student was taking courses rather than to the school district. Senator Kim Elton explained that the school district would pay for courses taken by the part-time high school students of that district. Tuition costs average $73 per credit hour. Senator Kim Elton noted that the participating post- secondary schools must be publicly funded. A private flying school does not qualify. He also stressed that participating students must meet the requirements of the college or vocational school they wish to attend. Co-Chair John Torgerson asked if the adoption of this bill would require school districts to transport students to postsecondary classes. He referred to special education programs that require school districts to provide additional transportation. Senator Kim Elton said the bill specifically dictates that the student is responsible for transportation plus any extra fees involved in the postsecondary courses. Co-Chair John Torgerson asked about the impact the Running Start Program would have on the TEK PREP program in his district that actively solicits high school students to take college courses for secondary school credit. Senator Kim Elton replied that language had been added to SB 112 specifying that nothing in the bill would prohibit school districts and postsecondary institutions from entering into arrangements similar to the Kenai Peninsula program. He said he was continuing to work with school districts to ensure the bill does not preclude school districts' innovative programs. Senator Randy Phillips remarked that the Anchorage School District felt this program was an unfunded mandate. As Co-Chair John Torgerson understood, the intent of the bill is to use a part of the per-student formula funds that presumably would be leftover since the student does not attend the secondary school on a full-time basis and therefore incur the full cost to educate. He did not agree that SB 112 is an unfunded mandate. Senator Kim Elton agreed with the co-chair. He pointed out that there are some students who do not attend any classes at the high school and yet the school district receives full funding for those students. He said that an argument could be made that the post-secondary campus should receive all of the funds if that is were the student attends classes. However, many of these students still receive school district support by way of counseling and other services and are eligible to participate in extracurricular activities and the district should be compensated. Senator Kim Elton stated that "there was no net loss to education under this program." He explained that the funds would not be removed from the education component, simply shifted from a secondary to a postsecondary level of education. Co-Chair John Torgerson asked if there were limitations on the types of post secondary courses that would qualify for the program. He gave an example of a pottery class and wanted to know if graduation credits would be given for those types of classes. Senator Kim Elton answered that was possible but noted that the high school would have the authority to determine credit allocations for courses. Senator Kim Elton stated that this bill would allow a student in good standing to take a course at a university that was also offered at the high school, such as French I. This would allow the student to obtain college credit as well as high school graduation credit. He surmised that a student could fulfill the requirements of their first year in college before graduating from high school. He spoke of the financial benefits this would have to families. Senator Dave Donley relayed how during his senior year at Diamond High School, he took university courses in lieu of high school courses. He worked a summer job to pay for the post secondary courses, and didn't expect anyone else to pay for them. He supported this on-going program of allowing dual credit. However, this bill expects the school district to pay the tuition, which he disagreed with and he believed that the individual student should be responsible for the cost. He noted that the Anchorage school district opposed the bill and he felt it places a burden on the district. Senator Dave Donley argued that the costs to school districts would not go down because the courses would still need to be maintained for those who might fail a university class and return to the high school for that class. The school district could not anticipate the need for the classes and would have to continue providing them. He stressed that it was the student's right to take the high school class. He also noted that there would still be expenses to the high school for services provided to the students. Senator Lyda Green referred to language on page 3 line 2 of the committee substitute that stipulated that the post secondary school cannot charge a fee for the award of college credit when high school credit is also granted. Senator Kim Elton explained that this was a simple provision to prohibit a double charge to both the school district and the student. EDDY JEANS, Manager, School Finance Section, Education Support Services, Department of Education told the Committee that the department had already testified in support of the concept. Eddy Jeans said he was present to discuss the fiscal note. The indeterminate amount notation was due to language on page 2 line 18 of the committee substitute that stipulated that a student who completed the course requirement for high school graduation but had not yet received a diploma can participate in the Running Start program. Students who do not pass the high school graduation qualification exam will be permitted to continue in the public school system up until the age of twenty, with the normal graduation age being eighteen. Under this provision, a student who intentionally fails the exam could exploit the program for up to two years of college courses. Senator Lyda Green suggested a stipulation requiring that a student who failed the exam and had a grade point average that was above a certain level shall be eliminated from the program. She stated that she did not support the bill, but thought this might be a way to avoid the potential exploitation reflected in the fiscal note. Eddy Jeans responded that a student could have a 4.0 grade point average and still fail the graduation exam. Co-Chair John Torgerson didn't have any correspondence from school districts relating to the bill and wanted to know if the department had received feedback. Eddy Jeans replied that the department had not. Senator Randy Phillips knew that the Anchorage School District opposed the bill. Senator Dave Donley asked if the department actively solicited input from local school districts on this legislation. Eddy Jeans answered that the department had not. Senator Dave Donley expounded on his opinions of the Department of Education. He thought that before the department voiced support of the concept of the bill, it should have consulted with local school districts. Co-Chair John Torgerson ordered the bill held in committee. CS FOR HOUSE BILL NO. 40(FIN) am "An Act merging certain departments in the executive branch of state government; changing the names of certain departments in the executive branch of state government; transferring duties among departments and offices in the executive branch of state government; providing that certain discretionary duties formerly performed by the Department of Community and Regional Affairs are mandatory in the department to which those duties are transferred; relating to the licensing of child care facilities; relating to the division of vocational rehabilitation; relating to the Alaska Human Resource Investment Council; adjusting the membership of certain multi-member bodies; providing that a certain commissioner may designate department employees to serve in the commissioner's place on a board, council, or similar entity; providing for advice to be given by a department head to the governor and other commissioners on the delivery of government services to rural areas and providing for recommendations to be made to the governor and other commissioners by that same commissioner about policy changes that would affect rural governments and rural affairs; relating to the federal community development quota program; eliminating references to the division of tourism; eliminating a reference to manpower training programs; eliminating references to the director and deputy director of international trade; eliminating the requirement for a local advisory committee for consideration of rural electrification loans; and providing for an effective date." This was the first hearing for this bill before the Senate Finance Committee. REPRESENTATIVE VIC KOHRING, sponsor of the bill testified. With the current difficult financial situation, he felt the legislature needs a more creative approach to address the budget beyond simply making cuts. He thought the legislature should look further to find more efficient ways to deliver programs. HB 40 combines the Department of Community and Regional Affairs and the Department of Commerce and Economic Development into one department titled the Department of Community and Economic Development. According to Representative Vic Kohring, both departments have similar missions to implement programs that encourage economic development. He stated that by combining the departments, the state would realize cost savings while maintaining the same level of service. Representative Vic Kohring referred to an organizational chart that was before the members. The chart shows the placement of various programs under the proposed configuration of HB 40. He noted that the Department of Administration, Department of Labor, the Department of Health and Social Services and the Office of the Governor are also impacted by the legislation. Two programs currently under the Department of Administration, the Capital Matching Grants (Incorporated) program and the Municipal Grants program, would move to the Department of Community and Economic Development. The Department of Labor will become the Department of Labor and Workforce Development and gain five programs. These programs were: the Adult Basic Education and the Vocational Rehabilitation programs currently in the Department of Education; the Job Training Partnership Act and the State Training and Employment Program currently in the Department of Community and Regional Affairs and the Alaska Human Resource Investment Council currently in the Office of the Governor. The Department of Education will become the Department of Education and Child Development and incorporate four additional programs. Programs moving from Department of Community and Regional Affairs are Head Start, ChildCare Pass II, III and Day Care Assistance. The Licensing of ChildCare Facilities would move from the Department of Health and Social Services to the Department of Education and Child Development. Representative Vic Kohring told the Committee that Senator Pete Kelly had initiated the concept of reorganizing programs four years ago with different legislation. Representative Vic Kohring said he and Senator Pete Kelly have worked together since then to streamline the concept into HB 40. Representative Vic Kohring pointed out there had been substantial hearings over the years on the matter and that an argument could not be made that the process was being rushed. Representative Vic Kohring stressed the main purpose of HB 40 to save money year after year. He added that programs will be delivered with much greater efficiency. He thought this legislation places programs into departments in a logical manner for budget planning. Representative Vic Kohring then listed features of the legislation. One feature is to streamline bureaucracy by eliminating a commissioner's office and creating a new agency that will cost less to operate. Another feature of the bill is to protect the integrity of programs to the benefit of rural communities, according to Representative Vic Kohring. He surmised that because the programs will cost less to operate, they would be less likely to suffer budget cuts. Representative Vic Kohring stated that as a result of placing the economic development programs together into the new department, there would be a greater focus on economic development in the state. Representative Vic Kohring said the new department creates a one-stop shopping center. He brought the Committee's attention to another handout that showed nine economic development programs saying it was strong justification for this bill in that it pointed out similarities between the Department of Commerce and Economic Development and the Department of Community and Regional Affairs. He hoped that over time when the legislation was implemented the two agencies would be blended and would operate with less overhead. Representative Vic Kohring stated that there would be future savings beyond what was reflected in the fiscal note. The Administration would be responsible for achieving those savings. Another feature of the bill was that it ensures that local government assistance will continue, according to Representative Vic Kohring. The bill enhances infrastructure planning and the state's economic development strategy. Representative Vic Kohring said the bottom line was that the bill puts the State Of Alaska "on a path to smaller and smarter government." Representative Vic Kohring told the Committee that great effort was put into selecting the new department names. He said there was a concern that one of the agencies was being eliminated when actually only the name was going away. Representative Vic Kohring referred to another handout that addressed the benefits to rural Alaska. He wanted to alleviate concerns that the bill would be detrimental to rural communities. The purpose of HB 40 was strictly economically related, he stressed and would unify scoping and planning assistance, infrastructure construction and financial assistance into one department. Representative Vic Kohring intended that the budget subcommittees of both the House of Representatives and the Senate would evaluate the results of the reorganization in the next year and locate additional savings potential. The evaluation was not dictated in the bill, but he expected it would occur. Representative Vic Kohring said that there was concern that this new department would become a mega-agency. However, he claimed, the department would employ approximately 450 people and would be the fourth smallest agency in state government. Another concern was that additional responsibility would be placed on existing personnel. Representative Vic Kohring did not believe that would happen with the exception of additional oversight by the new commissioner's office. Great care was taken when drafting the bill to ensure federal funds were not jeopardized, according to Representative Vic Kohring. Representative Vic Kohring then read excerpts from two letters in support of the legislation written by people formally involved with the affected agencies. The first was from Don Tanner, former Deputy Commissioner of the Department of Community and Regional Affairs. His letter stated that HB 40 is a smart way to cut government, eliminate unnecessary overhead and allow one department to be responsible for improving the state's economy. It also stated that the legislation would increase efficiencies and greatly enhance economic growth in rural areas. Paul Fuhs, former Commissioner of the Department of Community and Economic Development under the Hickel Administration wrote the second letter. It stated that combining the Department of Commerce and Economic Development and the Department of Community and Regional Affairs would create a more effective program. The letter also referred to complaints received from participants who felt they were bounced from agency to agency when trying to access services. Representative Vic Kohring summarized his testimony saying that the legislation streamlines government, protects important programs and provides better service for the public by delivering services for less money. Senator Pete Kelly noted the bill proposed moving the Head Start and the Day Care Assistance programs to the Department of Education and asked if feedback on this was received during hearings in previous committees. MIKE KRIEBER, staff to Representative Vic Kohring, answered that the original bill moved the two programs to the Department of Health and Social Services. The intent of the move was to combine those programs into one. In working with the Administration it was determined that the programs would be best served under the Department of Education, according to Mike Krieber. Senator Loren Leman wanted to know how the other new department names had been conceived. Representative Vic Kohring replied the Administration recommended the names and he thought it didn't matter what the departments were called so long as they reflected the goals laid out in this legislation. Senator Al Adams appreciated the consideration given to rural communities. He wanted to know why the Municipal Grants program and the Capital Matching Grants program should be moved from the Department of Administration since they were already small and efficiently run operations. Representative Vic Kohring responded that it would be better to have the programs in the new department because they were already administered through the Department of Community and Economic Development but funded through the Department of Administration. The change would eliminate the extra step involved with the funding allocation. Senator Al Adams hoped the personnel who currently operated the grants programs would be transferred to the new department since they knew the system. Senator Al Adams referred to the boards and commissions attached to the three affected agencies. He pointed out the elimination of two seats on the Power Project Loan Committee and wanted to know the reason for the reduction and if other boards or commissions are similarly changed. Representative Vic Kohring responded the change was made to the bill with an amendment in the House Finance Committee. Mike Krieber explained that the board had seats for the commissioners of the Department of Community and Regional Affairs and the Department of Commerce and Economic Development. With the combination of the two agencies and elimination of one of the commissioner positions, only one department representative seat is needed. That left the board with an even number of seats. To balance the board for voting purposes, one of the public member seats is also eliminated. Mike Krieber continued by saying that the Alaska Coastal Policy Council along with other miscellaneous boards will have a reduction of one seat to reflect the combination of the two commissioner's offices. The Oil and Gas Policy Committee is one of several other boards that increases its membership to include the commissioner of the Department of Revenue. Senator Gary Wilken referred to the sponsor's cost savings handout showing savings of $970,000 and to the fiscal note showing a saving of only $355,000 and wanted the sponsor to reconcile the differences. Representative Vic Kohring suspected that when the legislation is implemented, the actual savings would be somewhere between the two analyses. He felt there are other areas of potential savings that are not listed on either analysis such as the elimination of additional positions. For example, he thought the director position for the current Division of Community and Regional Development is no longer needed because the childcare and job training programs will be transferred from the Department of Community and Regional Affairs and the Department of Community and Economic Development. Senator Gary Wilken commented on the department name changes, saying he felt there could be some confusion with the similar acronyms of the new names and existing department names. Senator Loren Leman wanted to see department titles as short as feasible and to reflect the functions of the department. Tape: SFC - 99 #133, Side B 6:23 PM Senator Loren Leman continued pointing out that three departments end with "Development". His desire was to make the titles as simple as possible. Senator Al Adams asked how the four components shown on the handout titled "Benefits to Rural Alaska" increase efficiencies or enhance economic development in rural Alaska. Representative Vic Kohring responded that the new agency focuses entirely on economic development by extracting non-economic development programs to the Department of Education and the Department of Labor where they are more appropriate. As far as efficiencies, Representative Vic Kohring thought that if the economic development programs were under one roof, then when a community leader seeks funding or loan programs they only have to make one phone call. He hoped that in blending the programs together, there would be less need for expensive overhead in office space, employees and equipment. Representative Vic Kohring hoped that in time, all the related programs would blend together. Co-Chair John Torgerson wanted to know if this bill made any substantial changes to statute. Representative Vic Kohring qualified that he knew the legislation was intimidating but that it only shuffles programs and repeals unnecessary statutes. He pointed out that Manpower Training Program, which the Administration currently did not operate, is eliminated in statute at the Governor's request. Representative Vic Kohring noted the presence of Representative Gene Therriault who contributed greatly to the legislation. Senator Randy Phillips was concerned about the fiscal note and the differences between it and the sponsor's analysis. Representative Vic Kohring noted the Administration anticipated it would cost $200,000 to implement the bill, which he thought was reasonable considering the major restructuring. As far as the projected savings, Representative Vic Kohring believed there was simply a difference of opinion between himself and the Administration. Senator Randy Phillips said the real question was who handled the merger, the Administration or the Legislature. Representative Vic Kohring said all involved parties would watch the process. He repeated details of particular positions and programs he felt could be combined or eliminated. Senator Randy Phillips commented about a past executive order to combine public works and public highways into the Department of Transportation and Public Facilities. He expected there were many more employees and a larger budget since that merger twenty years ago. He did not know if greater savings and more efficient delivery of services were the result. Representative Vic Kohring hoped to use HB 40 as a model for the future. He had been working on the bill for four years and plans to monitor the success rate once it passes into law. He said he intends to determine where cost saving is realized and where additional savings can be addressed. Additional legislation could be considered for future adjustments, he added. He also hopes the budget subcommittees will watch the progress. Senator Al Adams wanted to know if the plan is to eliminate the municipal revenue sharing programs. Representative Vic Kohring answered that it is not. Senator Al Adams then asked if moving the Power Cost Equalization program to AIDEA had been considered. Mike Krieber said it was discussed. AIDEA is currently in the Department of Commerce and Economic Development and will be moved into the new department along with the energy programs currently in the Department of Community and Regional Affairs. Senator Gary Wilken asked if there would be public testimony in this committee. He was interested in hearing comments on the movement of education programs. Co-Chair John Torgerson noted that no one was signed up but could speak if they chose. Senator Randy Phillips asked if it wouldn't be better to combine this bill with a fiscal plan for implementation rather than adopt this bill and worry about implementation next session. Senator Lyda Green commented that the Senate Finance Committee is the proper forum to do so. Senator Randy Phillips stressed the fiscal implementation direction was the missing link. Representative Vic Kohring responded that he had made significant accomplishment in coming to agreement with the Administration. He noted that originally the Administration calculated a cost of $1.6 million to implement the bill and that he was pleased the cost had been brought down. He was disappointed with the elimination of some positions. Ultimately, he felt a delicate balancing act was achieved. KAREN REHFELD, Department of Education came to the table at the request of Senator Gary Wilken. He wanted to know the comfort level of the department taking on the duties of childcare. Karen Rehfeld said there would be a number of responsibilities added to the Department of Education including the Daycare Assistance Program, Child Care Pass II and III, Head Start, Childcare Licensing and some research programs. The department did have some concerns since these are new areas. The department understands the role of quality childcare development in the child's ability to learn once they enter the school system. Karen Rehfeld said the Department of Education has ongoing discussions with the Department of Health and Social Services and the Department of Community and Regional Affairs who are willing to assist in the transfer of the programs. Senator Gary Wilken wanted to know if there was any indication that the preschool program operations would be different than K-12. Karen Rehfeld replied that the licensing of childcare facilities was the area of greatest concern because of the difficulty to implement by the effective date of the bill. Currently, the Department of Health and Social Services combines the childcare licensing functions with licensing of foster care. To split the functions will take longer than the July 1, 1999 date in the bill. An amendment was made in the House of Representatives to delay the effective date of to July 1, 2000. Karen Rehfeld voiced concerns that the Department of Education's current resources is not adequate to cover the costs of preschool certification. A proposal before the Conference Committee on the FY00 Operating Budget would eliminate all general funding for that component. Senator Gary Wilken wanted to follow the progress of the new Department of Education and Childhood Development. He referred to page 9 line 23 of the House Finance Committee substitute that granted the department the ability to issue a variance of up to two years for a childcare center. He wanted to speak further to the witness at a later time on this matter. Co-Chair John Torgerson noted a proposed committee substitute, SCS CS HB 40 (FIN) 1-LS0056/N 5/11/99, before the members for consideration. Senator Lyda Green moved for adoption as a Workdraft. Senator Al Adams and Co-Chair John Torgerson objected. Senator Lyda Green detailed the changes proposed in Version "N". The duties of regulating meat, poultry, dairy products and livestock are transferred from the Department of Environmental Conservation to the Department of Natural Resources Division of Agriculture. Senator Lyda Green stated the Division of Agriculture is the typical division of oversight for these programs in most other states. The management of pesticides will also transfer from the Department of Environmental Conservation to the Department of Natural Resources Division of Agriculture under the proposed committee substitute Version "N". Senator Lyda Green explained the lack of a fee structure imposed on manufacturers of pesticides and fertilizers imported to the state and her intent to establish a system in the future. CS HB 40 Version "N" creates a new Division of Safety Inspections within the Department of Public Safety to operate the Alaska Occupational Safety and Health program and perform safety inspections currently managed by the Department of Labor. The Alaska Safety Advisory Council will also transfer to the Division of Safety Inspections. The licensing and issuance of and certificates of fitness will be consolidated into the Division Occupational Licensing in the new Department of Community and Economic Development. The Alaska Labor Relations Agency will transfer from the Department of Labor to the Department of Administration. Co-Chair John Torgerson clarified the committee substitute makes no substantive changes to the law; only shifted programs to different agencies. Senator Pete Kelly wanted to hear from the sponsor on the proposed committee substitute Version "N". Co-Chair John Torgerson noted the sponsor did not have a copy of the committee substitute. Senator Al Adams asked Senator Lyda Green if impact statements were received from each of the affected agencies. Co-Chair John Torgerson said it was his intent if the committee substitute Version "N" was adopted HB 40 would be heard later in the week after department impact statements were submitted. AT EASE 6:46PM / 6:47PM Senator Lyda Green removed her motion to adopt SCS CS HB 40 1-LS0056/N 5/11/99. Co-Chair John Torgerson announced that the committee substitute will be distributed and the departments given an opportunity to comment. Co-Chair John Torgerson ordered HB 40 held in committee. AT EASE 6:48PM / 7:03PM Co-Chair John Torgerson announced SB 113 would not be heard this meeting. CS FOR SPONSOR SUBSTITUTE FOR SENATE BILL NO. 94(HES) "An Act relating to the medical use of marijuana; and providing for an effective date." Senator Loren Leman, sponsor of the bill, explained this legislation was before the Committee as a result of the ballot measure voters adopted in the last election to legalize the use of marijuana for medical treatment. He became aware of problems with enforcement of the new law by the Department of Public Safety and the Department of Law. He stressed this bill does not repeal the initiative, only provided definition so the law can be enacted as intended. Senator Loren Leman believed "there was a massive campaign of misinformation" involved in the development of this legislation. He added that fortunately, a representative of the Alaskans for Medical Rights organization came the table to work constructively with the Administration and himself. The agreements reached are reflected in the Senate Health and Social Services committee substitute, 1-LS0524/M, and meet most of the requirements of the sponsor, the Administration and the medical marijuana organization. Senator Loren Leman said amendments were before the Committee that will provide further clarification to the bill. Senator Loren Leman noted Senator Al Adams submitted several amendments, some of which were identical to ones he submitted. Senator Loren Leman supported those identical amendments. ELMER LINDSTROM, Special Assistant, Office of the Commissioner, Department of Health and Social Services, came to the table. He testified that because the statute to legalize medical use of marijuana was passed by the voters, the department had no opportunity to secure funding for the new program. An increment was added to the FY00 Operating Budget under the Bureau of Vital Statistics component for approximately $73,000 for one staff position to operate the registry, produce identification cards and operate the program. That component was not approved in either the House or the Senate Finance Committee budgets noted Elmer Lindstrom. Therefore, the fiscal note reflected the department's reassessment of the amount needed to operate the program. Elmer Lindstrom added that this legislation would add to the department's responsibility even though the amount of the fiscal note is less than originally requested in the FY00 operating budget. Co-Chair John Torgerson asked if the department supported the legislation. Elmer Lindstrom answered that the Administration supported clarification of the ballot measure. The Department of Health and Social Services' only concerns were to avoid a great administrative burden and to draft enforcement guidelines that do not hamper the confidentiality relationship between physicians and patients. The department would defer to the Department of Law and the Department of Public Safety on the questions of enforcement legality. Co-Chair John Torgerson wanted to know if the committee substitute changed the ballot measure beyond technical clarifications. Elmer Lindstrom replied that he was not the best person to answer the question. He noted that the Department of Law does not think the bill was a repeal of the initiative or goes beyond the ability granted to the Legislature to amend an initiative. DAVID FINKLESTEIN of Alaskans for Medical Rights testified. He believed it was important to note that when the bill was first introduced, his organization felt it essentially repealed the proposition. The organization took a defensive posture on the legislation because it felt affected patients would not be able to take advantage of the law to allow medical marijuana use, according to David Finklestein. He added that the sponsor and the Administration have since made a good effort to address the public's concerns. However, the organization still had some concerns with the committee substitute. David Finklestein stressed that the committee substitute is not simply a technical change to the ballot initiative, it is much larger. The mandatory registration requirement requested by law enforcement is not the intent of the initiative, according to David Finklestein. The ballot measure offered voluntary registration for those patients wanting protection under the law. David Finklestein stressed that if this bill passes, it will be the first state of those with medical marijuana laws to impose mandatory registration requirements. SB 94 also contains restrictions on the amount of marijuana a patient can possess and stipulates that a patient must prove a more serious condition to possess a greater amount. A provision in the bill restricts caregivers as well, David Finklestein stated. David Finklestein concluded by stressing that Alaskans for Medical Rights still had major concerns with the bill but noted that the sponsor had done much to address those concerns. Senator Gary Wilken moved for adoption of Amendment #1. Co- Chair John Torgerson objected for explanation. Senator Gary Wilken explained that during the Senate Health and Social Services Committee hearing on the bill, a draft version contained a provision stating that a person using medical marijuana must visit a physician at least once every three months. The current version of the bill, CS SS SB 94 (HES) 1-LS0524/M, allowed the patient to visit a physician only once, obtain a prescription for marijuana, and not be required to have follow-up visits for renewed prescriptions. Senator Gary Wilken felt that provision was too liberal. Amendment #1 requires a patient to visit a physician in person at least once a year. Senator Loren Leman noted he had no objection to the amendment. Senator Gary Wilken asked for David Finklestein's comments on the amendment. David Finklestein concurred with the first two sections of the amendment requiring documentation from the physician, but felt the last section, requiring annual visits to a physician, places a burden on those living in rural areas away from health care facilities. Under this amendment, the patient is required to submit annual documentation from the physician stating that the condition is still present. Therefore, David Finklestein felt that because many conditions are ongoing and not curable, the doctor visits might not have any other benefit than to satisfy this statue. Without objection, Amendment #1 was adopted. Senator Al Adams moved for adoption of Amendment #2. Co- Chair John Torgerson objected for explanation. Senator Al Adams explained the current committee substitute requires a physician to provide the Department of Health and Social Services with a list of the patient's symptoms. He believed there was no reason this confidential information should be provided to the department, and noted the department does not plan to include this information in a patients registration records. Senator Loren Leman pointed out the reason for the provision to require a list of the patient's symptoms is to reduce the chances of fraud. However, he concluded that because the list of symptoms would be generic, including pain, nausea, etc., it would probably become useless information. He had no objection to the adoption of the amendment. Without objection, Amendment #2 was adopted. Senator Al Adams moved for adoption of Amendment #3. Senator Lyda Green objected for explanation. Senator Al Adams explained that this amendment relates to existing exceptions stipulating that a primary caregiver can serve more than one patient as directed in the ballot initiative. The current committee substitute only allows for caregivers that live in the same household as the patient and are related by blood or marriage. This amendment allows a caregiver to serve more than one patient who is a family member, even if they live in a different household. Senator Loren Leman stated that in the interest of working with the Administration, he concluded that this amendment is a provision he can accept. There was no objection and Amendment #3 was adopted. Senator Al Adams moved for adoption of Amendment #4. Co- Chair John Torgerson objected for explanation. Senator Al Adams explained this amendment includes another exemption by giving the Department of Health and Social Services discretion to allow a caregiver to serve more than one patient to avoid unnecessary hardship. Senator Loren Leman pointed out that in previous testimony, the Department of Law has stated opposition to this amendment because it does not provide specific guidelines. Without direction in statute, this would become a meaningless provision, according to Department of Law testimony given in earlier hearings. Senator Loren Leman was not opposed to crafting guidelines for the Department of Health and Social Services, but had been unable to accomplish that to date. He believed it could be done over the interim. Senator Al Adams asked if David Finklestein had discussed this matter with the Department of Law. David Finklestein answered that this amendment was at the suggestion of the Department of Health and Social Services to assist in administration of the current program. He said the intent is that this exemption will be for the rare occurrences of patients in a hospice program or other unique situations of having more than one caregiver. MIKE POLLY, staff to Senator Loren Leman stated that the issue had been raised with the Department of Law. That department argued the importance of maintaining a one-to- one relationship between the patient and the primary caregiver and supported a provision allowing each patient only one caregiver and each caregiver only one patient. The problem with the multiple patient exception, according to Mike Polly, is the creation of a financial incentive to caregivers profiting from the sale of marijuana to a multiple number of patients. This has been a problem in other states with medical marijuana laws. The Department of Law surmised that unless there are detailed guidelines allowing when the exemptions are appropriate, the Department of Health and Social Services will simply "rubber stamp" exemptions. Senator Al Adams wanted to hear from the Department of Health and Social Services. Elmer Lindstrom said this language was substantially similar to the initiative language and to the regulations adopted after public review. He detailed the situations of specialized caregivers that the Bureau of Vital Statistics anticipated granting hardship exemptions for. He acknowledged the concerns of the Department of Law and the Department of Public Safety of multiple caregivers serving multiple patients. Co-Chair John Torgerson asked that if this amendment failed to pass would the department simply implement the similar regulations. Elmer Lindstrom responded that no, the regulations would not include exemptions. Tape: SFC - 99 #134, Side A 7:26PM [Tape malfunction] Senator Gary Wilken opposed the amendment Amendment #4 failed to be adopted by a vote of 1-8. Senator Al Adams voted in favor. Amendment #5 was not offered because it was the same as Amendment #2. Amendment #6 was the same as Amendment #3 and also was not offered. Senator Loren Leman moved to adopt Amendment #7. Co-Chair John Torgerson objected. Mike Polly explained the amendment deletes language from the committee substitute that required the patient to prove any marijuana found in possession to be strictly for the treatment of the prescribed medical condition. He said there had been a great deal of feedback in opposition to this provision because of the need to prove a "double negative." The patient is being asked to prove the marijuana is not used for a non-medical purpose. Mike Polly consulted with the Department of Law, who did not agree with the double negative interpretation, but indicated that AS 11.71.090(a)(2) as proposed in CS SS SB 94 (HES), containing this provision, is superfluous because of the provision in paragraph 3 of the same statute. AS 11.71.090(a)(3) prohibits the manufacture, delivery or possession of marijuana for purposes other than medical use, which accomplishes the same objective as proposed in paragraph 2. Amendment #7 was adopted by a vote of 8-1. Senator Al Adams cast the nay vote. Senator Loren Leman moved for adoption of Amendment #8. Co- Chair John Torgerson objected for explaination. Mike Polly explained that in the original version of SB 94, language was included to clarify that the possession limit of one ounce/six plant of marijuana applied collectively to both the patient and the primary caregiver. This provision was inadvertently omitted in the Senate Health and Social Services committee substitute and brought to the sponsor's attention by the Department of Law, according to Mike Polly. By inserting "in the aggregate" after "possess" on page 11 line 10 of the committee substitute, this amendment will reinsert the collective possession limit for both the patient and the caregiver. Without objection, Amendment #8 was adopted. Senator Loren Leman moved for adoption of Amendment #9. Co- Chair John Torgerson objected for explaination. Mike Polly explained the amendment changes the circumstances under which law enforcement will have access to information in the registry of marijuana patients. Currently, the committee substitute allows law enforcement access in the course of any criminal investigation. This issue had been the subject of controversy in previous hearings because of the relatively unlimited access, according to Mike Polly. The amendment stipulates law enforcement only has access to the registration records during the course of a criminal investigation of an individual suspected of a violation of AS 11.71, AS 17.30 or AS 17.37, the statutes that address controlled substances. Amendment #9 was adopted without objection. Senator Al Adams noted that he had three amendments he would not offer at this time. He hoped the sponsor would work with Alaskans for Medical Rights to address the items in these amendments. If a compromise is reached, the amendments could be offered on the Senate floor, Senator Al Adams said. Senator Dave Donley felt this legislation is a good product. He thought the statute is necessary to implement the ballot initiative. The sponsor, the Department of Public Safety and the Department of Law put a lot of work into the bill, stated Senator Dave Donley. Senator Loren Leman echoed Senator Dave Donley's comments. He appreciated the assistance and the expertise of the Administration with this bill. Senator Loren Leman offered a motion to report CS SB 97 (FIN) from committee with individual recommendations and accompanying fiscal note. There was no objection and it was so ordered. HB 209 was not heard because the teleconference link was interrupted. Co-Chair John Torgerson announced the Senate Finance Committee would hear HB 156, HB 68, HB 102, HB 157 and HB 217 the next day. ADJOURNED Senator Torgerson adjourned the meeting at 7:37PM. SFC-99 (27) 5/11/99